Debt surged and household net worth tumbled in the first three months of the year as the initial impact of the coronavirus pandemic hit, according to Federal Reserve data released Thursday.
Total domestic nonfinancial debt jumped by 11.7% to $55.9 trillion, the Fed said in its quarterly statement on domestic financial accounts. Debt had increased by 3.2% in Q4 of 2019.
At the same time, plunging stock market values took a bite out of net worth, which fell $7.4 trillion to $110.8 trillion. Wall Street, however, staged a sharp recovery off its March lows, so much of that loss likely has been made up. Equity values fell by $7.8 trillion, while real estate value increased by $400 billion in the first quarter.
The biggest debt gain come on the business side, rising 18.8%, while federal government debt also jumped 14.3%. Total federal debt recently passed $26 trillion.
Household debt rose 3.9% due in large part to an increase on the mortgage side of 3.2%. Consumer debt rose 1.6%.
The increases in debt and decrease in household worth came as the longest expansion in U.S. history came to an end.
Earlier this week, the National Bureau of Economic Research declared that a recession started in February, following an 11-year expansion. The bull market in stocks ended the same month but turned around on March 23.